Chaos ensues after Obama's insurance cancellation reversal

Nov. 15, 2013

David Isenstadt has spent the past six weeks working 12-hour days, seven days a week, trying to reach all of his insurance clients with canceled policies to switch them to new policies. Now this.

President Obama’s announcement Thursday that consumers can keep insurance plans that don’t meet the Affordable Care Act for a year will only create chaos, insurance brokers, regulators and carriers say.

“To make a possible change like this now will only cause more confusion and compound the problems that the ACA is causing” on Jan. 1, says Isenstadt, who owns New England Insurance Group in Guilford, Conn.

The insurance industry is none too pleased that the onus is now on them to satisfy consumers who are outraged about their policies being canceled. Insurers and insurance commissioners don’t have to let people extend their plans, but “it will no longer be implementation of the law that is forcing them to buy a new plan,” the White House said in a fact sheet.

The head of the insurance industry’s trade group says extensions could lead to higher premiums, just the effect Obama’s announcement was intended to prevent.

“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, CEO of American’s Health Insurance Plans, said in a statement.

“In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course,” Commissioner Mike Kreidler said in a statement.

One thing’s for sure: No one really knows how this will play out.

“It is unclear how, as a practical matter, the changes proposed today by the president can be put into effect,” National Association of Insurance Commissioners President Jim Donelon said in a statement.

In Illinois, insurance broker Allen Wishner says the carriers have been meeting with the state insurance commissioner since the president’s recent apology for the canceled policies. That led brokers to think an extension was in the works.

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Few of Wishner’s clients with canceled policies had chosen new plans yet. He’s still waiting for all the regulatory guidance he needs from the state before he switches anyone’s policy back to a pre-ACA policy and says he’ll be on a conference call Friday morning with Blue Cross Blue Shield.

If he’s allowed to offer extensions, Wishner says he will tell clients that “if you want what you had, knowing it’s shortcomings, that’s your individual right to do that.” Obama said insurers would be required to tell consumers that there are other options on the new exchanges for them.

Aetna said it supports efforts to let people keep their plans, but urged state regulators to allow it to update the company’s policies and get rate approval so it can get its plans “back on the market,” said spokesman Matthew Wiggin. Aetna, like AHIP, says the administration has to take action to stabilize the market to keep the move from backfiring and hurting consumers.

Insurers’ new premiums have already been established for 2014 based on the assumption that consumers will be moving to the state and federal exchanges in 2014, Ignagni said. She says she’s worried that fewer younger and healthier people may choose to purchase coverage on the exchanges, which could lead to higher prices and fewer choices for everyone.

Just 5(PERCENT) of Americans with insurance have individual policies that aren’t covered by their employers. Most of those people are ages 50-64, according to a 2009 report by the Commonwealth Fund.

Mike Caudill of Temecula, Calif., at 38, is one of the younger individual policyholders. The self-employed public relations executive had his $750-a-month policy with Anthem Blue Cross canceled for his family of four. He was going to have to pay an additional $200 a month for a new policy.

“I just spent three months looking for a new plan, picked this one and a month later Obamacare kicks in,” Caudill says. “The old market worked just fine for me. I never had any issues at any point.”

He hopes he is one of a reported 104,000 Californians getting a letter from Anthem alerting them they have until Feb. 1 to decide whether to change their insurance.

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Some ACA supporters agree with Obama’s decision to postpone enforcing the law for some people.

“It’s a way forward to help protect people,” says Heather Howard, former New Jersey commissioner of Health and Senior Services, now with the Robert Wood Johnson Foundation. “Given the problems with the website, it gives them a chance to check out their options.”

Columbia Business School professor Eric Johnson, who has studied the exchanges, says an extension will help people sort out the often confusing myriad of choices and still-confounding insurance pricing. Consumers, he says, “hold the status quo more dearly than they should.”

“There has been so little access on the federal site, they don’t know what their options are going to look like,” Johnson says. “It makes any fear they have about the new options even worse because they can’t see them.”

Donelon, insurance commissioner of Louisiana, said his group is concerned that the president said the federal government would use its “enforcement discretion” to delay enforcement of the ACA in 2014 for plans that are currently in effect. The decision continues “different rules for different policies” and threatens to undermine the new market for insurance, he said.

“The only reason consumers are getting notices about their current coverage changing is because the ACA requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today,” Ignagni says.

Says Wishner: “The customer service department will be working overtime. It’s going to be quite chaotic.”